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Cloud Computing Costs: The Real Scenario

There was a client who was quite apprehensive about the cost of cloud computing services and whether such costs should be incurred by organizations. Basically, this client was looking for separate servers for the different parts of the application tier. High customer loads were expected but there was budgetary constraints when it came to running dedicated severs. The company had estimated that the cloud computing costs would be lower but it did not turn out to be so as days progressed and there was pressure on the company’s budget.

The Concept of Usage Based Costing

So, why did the costs exceed in an unexpected way? Well, this is because the way the cloud hosting costs are calculated, varies widely. While in traditional hosting, the organization offers specific products with a set capacity, with cloud, the offering is more comprehensive and dynamic. However, for the cloud hosting services, a company pays only for the capacity it uses.

The advantage here is that many companies start out with lower capacity requirements than what comes with a standard, predefined package from a hosting organization. This means a lower cost at the outset. But as traffic grows, the capacity the company requires increases, and so does the cost. Furthermore, that cost will vary month to month, making it harder to budget for over time.

Cloud Hosting Seems Tailor-Made for Some Organizations

In spite of the costs, which can appear to be hidden for some companies, there is no denying that cloud promises the best opportunity to get any pilot application out to market at a relatively competitive price. That being said, the benefit of elastically scaling the capacity for applications comes at a price, a fact that needs to be weighed against the available budget and the flexibility of that budget.

Estimate Your Needs

Before adopting a hosting solution, companies need to look at some different options and consider how the costs change for increasing capacity. When testing applications, it’s important to run different levels of customer traffic and plot a graph to show how processing power, memory, storage and network traffic change. Interpolating this to higher levels will provide an estimate of what capacity a company will require for given levels of customer traffic to an application. This information can then be matched to the pricing models for the different hosting options to calculate estimated costs.

Cost Vs. Effort

Another thing to consider is the benefits provided by the hosting and what companies will need to manage themselves. A hidden cost that often shows up just when you need it least is the cost of labor, or how much time and effort you or other staff will need to put in to manage the application. For example, if a company reaches its capacity for its hosting option, it’ll need to either migrate its application to a larger capacity, or add additional instances of the same capacity to be able to meet the customer traffic demand. How much time and effort will this require? This should be compared to the cost of using a cloud model.

Consider Different Options for Different Needs

Once costs and benefits have been weighed and considered, an organization can draw up a plan that suits their budget and the amount of time and labor they have for managing their applications. Maybe all signs point to cloud hosting. Or perhaps it’ll make more sense to start with the cloud and then migrate to a specific server capacity once the market is established. This will entirely depend on the company and its specific hosting requirements.